Category: Anti Trust

Amazon announced the $15 pay raise today in response to criticism by progressive politicians like Sen. Bernie Sanders who recently introduced a bill to tax companies like Amazon 100 % for employees on government assistance. The company plans to hire over 100,000 seasonal workers this holiday season, the raise will apply to all full – time, part-time and seasonal workers beginning November 1st. The pay move by Amazon comes at a time when retailers are finding it hard to hire clerks and warehouse workers for wages generally under $15 @hr. Amazon’s move is a challenge to retail firms across the country forcing them to raise wages or lose out in hiring to Amazon. Sen. Sanders congratulated Amazon in a tweet, noting the raise was a ‘shot heard around the world, certainly for all hourly workers worldwide.

Sources: Amazon, The Wall Street Journal – 10/2/18

While the $15@hr wage increase made the headlines, the firm took away bonuses and stock awards for warehouse workers. The company said the wage increase more than makes up for the loss of bonuses and stock awards. What? Why is Amazon doing this? To mitigate the cost of raising wages to $15@hr to bottom line profits. Amazon needs to think through the message they are sending, do they want the ideas and dedication that bonuses and stock recognize or not?

In addition, the company said it would be lobbying in Washington for a raise of the federal minimum wage which has been stuck at $7.25 for ten years. Amazon uses a highly profitable server business to provide a cash feed to the retail business while building market share to eliminate competitors. Amazon raising wages makes it even more difficult for competitors to hire workers and retain them.

Next Steps:

We applaud Amazon for waking up and making this sweeping move to raise hourly wages to a baseline of $15 @ hr. At the same time we are concerned that with giving the wage increase they are taking away bonuses and stock awards – this policy sends the wrong message to workers. The wage increase is a strategic move as well, putting its weaker competitors back on their heels and in a worse political position. Are they going to oppose federal legislation that may come from a Democrat led House to raise the federal minimum wage? In a mid-term election year where non-supervisory workers have experienced stagnating wages since the 2008 recession Amazon competitors will be hard pressed to make their case to consumers. As politics is more in the spotlight for companies and consumers, brick and mortar retailers’ possible stand against raising wages may hurt sales and hiring.

With Amazon making the first move we agree with Sen. Sanders, who called on other major companies to start paying decent wages to their employees so they support their families, buy cars and purchase a home.

The e-retailer behemoth is in the cross hairs of political criticism in terms of work conditions like few bathroom breaks, to uncertainty with plans to add 40,000 robots over the next five years. The firm’s automation plans will have a significant impact on the workplace for non-college educated workers, we need to be working on a public policy recognizing the impact automation has on worker careers. Should robots be taxed as some have suggested? If so, based on what formula? How would the funding be used to support retraining and safety net needs for the workers displaced? Amazon has been able to amass a dominant retail position by using revenues from its business to business cloud server profits to mitigate the ecommerce business running at a loss and early development of brick and mortar stores. We stand by our earlier analysis that the server business – Amazon Web Services (AWS) be spun off from the e-retail business to level the market playing field with other retailers.

Hospitals are the number one cost in health care nationwide at $1 trillion per year. Healthcare is close to 20 % of the U.S. annual GDP. Physician and clinical services are second followed by prescription drugs.

Hospitals are at the center of the most intense and high care treatments for surgeries, interventions, procedures and emergency care. Most must take Medicare payments if they are to have a wide enough patient population to support their business. Yet, Medicare reimbursements often don’t cover the actual costs of treatment. Hospitals look to employer – insurer plans and cash customers to make up the difference.

The Wall Street Journal investigated a number of hospital – insurer contracts and found in some cases the hospitals and insurers were cutting contracts which included non-compete clauses. Thus, if a hospital had a dominant position in a patient market, it would require that the insurer not insure patients of their competitor. Clearly, a restraint of trade, causing employer plans to pick up the balance, and in some cases where doctors were affiliated with hospitals employees were having to pick up the extra cost. Employers have seen premiums from insurers going up to handle the extra cost of these sweetheart deals.

These close partnership deals between hospitals and insurers create higher costs where services are much cheaper outside of the hospital in a doctor’s office.

Instead of hospitals steering patients to their doctors for many services, they provide the services on an outpatient basis at a much more expensive price. Insurers pick up the outpatient cost and then charge employers and patients higher premiums than necessary.

Next Steps:

We have supported the Affordable Health Care Act provisions requiring insurers to insure all patients with existing conditions, and other patient oriented options. However, this law is only the first step in reforming the healthcare industry, rigorous enforcement of anti-trust laws needs to take place to eliminate practices like these non-compete agreements. We call for transparency in pricing of all drugs, and the relationship between drug manufacturers and pharmacies. We recommended in earlier posts that all Americans should have access to good quality health care, beginning with a healthcare account at birth. Then, as the patient takes a job, employer plans can be used, but always between jobs or disability the patient is covered. Medicare should be the first line of insurance for all from birth with employer plans supplementing the main plan. Medicare should have complete negotiating rights with drug manufacturers to get the best price for all patients. All health care for profit companies should be barred from buying back stock and wasting money on executives which is better spent reducing prices and increasing the quality of care.

An oligarchy is defined by Wikipedia as, “a form of power structure in which power rests with a small number of people”. One of the Elite is corporate tycoon Jeff Bezos, Amazon founder, who is thought to be the wealthiest person in the world with net worth estimated at $141 billion. He wields great corporate power leading an innovative company, pioneering e-retailing when many said it couldn’t be done building a $177 billion empire in e-Commerce, web services, grocery, and just about everything you can buy in a store you can get from Amazon. Amazon owns 43 % of the e-Commerce market, and has been responsible for a complete transformation of brick-n-mortar retailing causing the loss of thousands of jobs. The company name is synonymous with going out of business as some store owners declare they have been ‘Amazoned’.

Amazon has one of the largest lobbying forces in Washington, 94 strong:

Amazon spent $13 million on lobbying and is one of the top spenders on lobbying along with Google, AT & T and Oracle.

The Amazon corporate power juggernaut keeps rolling. The e-Commerce giant owns 50 % of the book print sales market for publishers, with Barnes and Noble in the teens and independent book sellers about 6 – 8 percent. Ten years ago, independent book stores held a 30 % share of the book print sales market until Amazon drove them out of business, with convenience and not being required to pay sales taxes to states (though the Supreme Court just ruled last week that e-Commerce firms must pay sales taxes). Now, in an ironic twist the firm has 3 brick- n-mortar stores and is opening 5 more in 2017- so Amazon drives the competition out of business, with low cost prices and no taxes then starts opening brick n-mortar-stores. Is that fair? In audio books Amazon owns Audible the No. 1 provider of audio books where last year listener – readers heard over 2 billion hours of programming. The Kindle subscription business holds 14 % of the e-reader market and is the fastest growing segment increasing 4 % in 2016

Amazon is humongous compared to its competitors with brick-n-mortar stores:

Without AWS Amazon would not be able to take profit from the B to B side of the business and fund the cut rate prices driving other stores out of business. While it may seem like this is capitalism ‘creative destruction’ at its best, this condition strikes us as unfair competition. Add a tax cut giveaway to corporations like Amazon, and the juggernaut keeps picking up speed at the expense of workers and democracy.

Next steps:

One Lobbyist Limit – The Company is a citizen according to the Supreme Court in Citizens United, then good it has one lobbyist representative to Congress.

Sunshine Contractor Monitoring – Amazon and the top 100 government contractors would have to contribute to a web site noting their business with the Federal Government, revenue from the contracts, agencies working with, number of government staff working with Amazon, Amazon staff size working on projects, where they are located, and all contacts with Congress, Executive branch staff – date, time, attends, discussion top, money involved, follow up. All these details would be available to the public on a web site 24/7. These disclosure are a ‘annual report’ to the people of the US about what the top 100 contracts are doing for our federal government, and us and how they are contributing to our government and society goals.

Campaign Contribution limits – $2700 per corporation if they are a person, that is all a citizen is allowed to contribute, and the Supreme Court found corporations were citizens, so Amazon has the same limit as a citizen.

Corporate Reform – top 2 corporations in an industry sector must have a minority number of outside board members elected by all the shareholders. Employees can form ‘councils’ along the line of the German worker council models. Salaries for executives would be limited to 50 times the average worker in the firm (consumer discretionary sector the average for CEOs is 350 times, Bloomberg, Feb 1 2018)., Stock buy backs need to end, or be phased out as they are artificially raising the price of stock on major exchanges by 20 – 15 % experts estimate just to line the pockets of executives and major shareholders, the funds are not going to wage increases, productivity investments or job training.

Anti – trust – Amazon needs to be broken up into a corporate web business – Amazon Web Services, and grocery business (Whole Foods never should have been approved) spun off. The e-Commerce business needs to stand on its own, plus we need to look for other ways to create fair- play markets possibly separating services from distribution,